Ceradyne Beats Expectations, Shares Jump

Shares of Ceradyne Inc. rose today after it beat analyst estimates for the third quarter.

The Costa Mesa-based maker of ceramic products and other components for defense, industrial and commercial uses saw its net income jump to $20.4 million, or 82 cents per diluted share, compared with 18 cents a year earlier. Analysts had expected earnings of 73 cents a share for the quarter.

The company saw revenue increase 61.3%, to $148 million, over the three months.

Analysts had forecast sales of $141.9 million.

Ceradyne shares closed up 8.5% on Tuesday, to a market value of $824 million.

The company attributed most of the growth to the renewed purchase of body armor products by the U.S. military. Ceradyne recently landed a $127 million contract for ceramic armor plates with the Defense Logistics Agency Group Support in Philadelphia for the U.S. Army, Navy, Air Force and Marine Corps.

The company saw continued growth in revenue from advanced ceramic operations, which accounted for $74 million in the third quarter compared with $28.3 million in same quarter a year ago.

New orders for the third quarter totaled $272 million, more than double the $110.8 million for the same quarter last year.

Ceradyne is starting the fourth quarter with a backlog of orders worth $354.9 million. It had a backlog of $136.3 million at the same time last year.

David Reed, president of North American Operations, said during a conference call that a recent shipment of new combat helmets in now undergoing “one final round of testing.”

“We are anticipating we will get through that testing by the end of the year with a potential for a possible award” at the end of 2011 or in early 2012, he said.

“Next year, we could ship between $45 million to $55 million,” he added. “It just depends on when we get the nod.”

The company announced a stock repurchase program in September for up to $100 million worth of shares on top of a similar plan authorized in 2008. Year to date, Ceradyne has bought back “843,000 shares for 25.8 million,” according to Pellizzon.

Ceradyne raised its full-year guidance to a range of $3.10 to $3.50 in earnings per diluted share. Analysts are estimating $3.19 for the year.

Chief Executive Joel Moskowitz said continued softness in solar products accounts for the spread on the company’s earnings guidance.

The company said it expects between $570 million and $600 million in revenue for the year. That puts it in line with a previously announced five-year “Ceradyne $1 billion” goal on revenue.